As Nokia depletes its cash pile amid a prolonged turnaround effort, investors are bracing for something that hasn’t happened in decades: no dividends.

The unprofitable phonemaker is consuming about $300 million a month, and many investors and bondholders say the company risks running out of funds as it struggles to gain traction for its smartphones, which trail Apple’s iPhone and devices using Google’s Android.

"Most crucial for Nokia now is to turn around their sales and reach profitability as soon as possible," said Mikael Anttila, who helps manage corporate bonds, including Nokia debt, at SEB in Stockholm. "Until then, it would be rational for them to not pay dividends, to help maintain what cash they have." Without a dividend, Nokia Chief

Executive Officer Stephen Elop risks alienating yield-focused investors at a time when the company’s stock price is headed for its fifth consecutive annual decline.

The cash concerns underscore the depth of Nokia’s crisis. The company has paid a dividend every year since at least 1989, which is as far back as its electronic records go. Even the breakup of the Soviet Union, a major buyer of Nokia’s networking gear whose demise spelled financial tumult for the company more than 20 years ago, didn’t prevent it from returning cash to investors.

Nokia, based in Espoo, Finland, will probably omit the payout for 2012 after slashing it by more than half over the past four years to 20 cents a share, according to data compiled by Bloomberg. To maintain the dividend at its current level, Nokia would have to pay about $964 million annually out of its dwindling bank account.

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Doug Dawson, a spokesman for Nokia, declined to comment on dividend plans. The phonemaker typically announces its annual payout when it reports fourth-quarter earnings in January.

Founded in 1865 as a pulp and paper mill on the Nokia River, the company expanded into mobile phones in the 1980s and became Europe’s most valuable corporation at the height of the technology boom. But Nokia was slow to adapt as touch-screen smartphones became the real drivers of the mobile handset market, and its stock has plunged about 90 percent since Apple introduced the iPhone in 2007.

The company has announced more than 20,000 job cuts, closed production and research facilities and sold patents and other assets in a bid to become profitable again.

Nokia lost 2.34 billion euros in the first half and analysts estimate losses will continue at least six more quarters, the average projections compiled by Bloomberg show. Its net cash has shrunk by half in the past five years to 4.2 billion euros at the of June and will drop below 3 billion euros by yearend, Standard & Poor’s predicts.

Nokia also has debt of 5.2 billion euros and some repayments are looming. A 1.25 billion-euro bond matures in February 2014, and the company faces repayments in 2016, 2017 and 2019, according to data compiled by Bloomberg. A 1.5 billion-euro revolving credit facility could help Nokia shore up its cash reserves.

With Nokia’s debt at junk status with the three main rating companies, it should already have suspended dividends, said Sami Sarkamies, a Nordea Bank analyst in Helsinki.

"It was a mistake not to stop the dividend payment given the weakened outlook," he said. "This may cost shareholders dearly if Nokia for example needs to pull the plug early on its smartphone revamp due to not being able to afford the costs."

Nokia controlled more than half of global smartphone sales before the first iPhone and Android devices were introduced. Today Nokia’s share in smartphones is about 6.6 percent, according to research firm IDC. IPhone and Android combined make up 85 percent of the market.

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Shares of Nokia have slumped more than 70 percent since February 2011, when the company said its phones would run the Windows operating system from Microsoft, where CEO Elop used to work. The stock has fallen 47 percent this year.

Nokia last year abandoned its home-grown operating system and began using Windows. On Sept. 5, Nokia introduced two new models that run Windows Phone 8, the newest version of the Microsoft program that Nokia is betting on to lure customers away from Apple and Google. The phones will face off against the iPhone 5, which was unveiled on Sept. 12 and shattered the first-day sales of the previous version.

The new Windows software has yet to win over users and may not be the catalyst Nokia is expecting, Kai Korschelt, an analyst at Deutsche Bank in London, said in a Sept. 6 note.

Apple and Google are likely to keep dominating smartphone sales, Korschelt wrote, with Android potentially gaining strength in the lower end of the handset market, which has long been Nokia’s stronghold. That would leave "limited room" for Windows handsets, Korschelt said.

And with restructuring costs still to come this year and next, the company’s free cash flow won’t become positive until after 2014, Korschelt said.

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The sputtering demand for Windows-based phones means Nokia "could well warn for the third quarter, or at least miss expectations," Pierre Ferragu, an analyst at Sanford C. Bernstein Ltd. in London, said in a Sept. 14 note.

The most likely outcome is Nokia facing three years of "difficult transition," serving a niche Windows Phone market and keeping a decent volume of business in low-end phones - a scenario that would deplete most of its cash, Ferragu said.

With Nokia no longer the biggest handset maker, its primary challenge will be to get its debt and spending down to a level that’s more appropriate for a company of its current size, said Arne Eidshagen, who helps manage about 350 million euros in high-yield debt, including Nokia’s, at Alfred Berg Asset Management in Oslo.

"The danger with a fallen angel like Nokia." Eidshagen said, "is that they can’t shrink the balance sheet to meet the new environment."